Letters to the Editor
shannonr
Published Letters: 286 Editor's Choice: 80
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1, 2, 3
[Read the article: What should we do with our $3 million?]
[Read more letters about this article: Here]I've been in exactly that situation (although the amount was slightly different) and here's what I did:
1. Buy two modest-but-comfortable properties in two places you want to live. Say, where you want to live now, and where you want to live in 10 years time. Rent the 10-year one to give you a small "safety net" income. That takes care of 1 million.
2. Lock a million away in long-term, safe, diversified investments. The kind of investment that will allow you to give your children (you are planning on children, right?) a great start in life, and whatever education they want.
3. Give a million away. I don't mean in one lump, but carefully, and meaningfully. You could start, say, a small foundation that gives away $25,000 each year to something you feel is worthwhile. If you set it up properly, you could give away that amount every year forever.
This plan will allow you to pursue, aggressively and without fear, any dream, any lifestyle, any wonderful idea that you have. And the "giving 1/3 away" part means you keep your soul.
On the flipside, here's three things NOT to do:
1. Do not "invest it all and live off the income". Nothing will drain your soul quicker. I know people in this situation; they're all unhappy.
2. Do not contact an "investment manager". You simply have no way of knowing who the "good ones" are, so doing this is exactly like going to Vegas with the money.
3. Do not listen to moneyless friends who advise you to invest in them, or their crazy get-rich-quick schemes. You may lose some friends saying "no" -- but were these leeches really "friends" in the first place?
Good luck!
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@deering
[Read the article: What should we do with our $3 million?]
[Read more letters about this article: Here]Sorry it took me so long to see your question. Here is our exchange again:
Me: Do not "invest it all and live off the income". Nothing will drain your soul quicker. I know people in this situation; they're all unhappy.
You: Really? Why? Whenever the topic of winning the lottery comes up in my family, that's the first thing most folks plan to do with the money. Did said people you know make the mistake of having nothing to really do with their time, or...?
Because unless you are an extremely unusual person, your lifestyle will simply expand to meet whatever budget you throw at it, and nothing will have changed, and you'll begin to obsess about the "investments" that are providing your "income".
For example, imagine you're earning $50,000. Not a fortune. You're not poverty-line, but you're not "comfortable" either. Vacations take planning. You've got a big mortgage, or you're paying too much rent -- take your pick. And you're working at a job that, although you don't love it, is at least providing you some intellectual/creative output.
So you "invest" the 3 million (5 million, 10 million, whatever) and you find that to cover tax, inflation, and "costs of investment" you're really only able to reliably pull 3 or 4 percent out per year to "live on".
From 3 million bucks, that gives you an "income" circa $100,000. Not a fortune. You're not poverty-line, but you're a little more "comfortable" than you were before. Do you see where this is going?
But now you have no creative output. Nothing is "chasing" you to make anything a success. It literally doesn't matter if your screenplay/novel/painting sells, so it doesn't matter if it's good, so you don't care about it. You spend some time going back to school, but there's no pressure on you to succeed. If you fail, you can come back next year... You travel a little, perhaps twice a year for 4 weeks each time, but you get lazy. There's no "drive" to enjoy yourself on your holiday -- you can come back any time.
Which is why I recommend what I did. Put 1/3 into some property (including the place you live) to take a little off the "grind". Put 1/3 into a fund for your children's education (but not enough to turn them into trust fund wankers). Give 1/3 away -- and you'll be amazed at how rewarding that can be.
And you're still going to work. Except now you have exactly enough freedom (and no more!) to tell your boss to take a flying frack, and find a job you really love. Maybe you can start that company you always dreamed about... (again, that's what I did!)
Literally, every single person I know who lives off an investment income is desperately unhappy. And we're not talking two or three people here, more like several dozen. And it's because they have no drive or need to work at anything. Oh, sure, they tinker at stuff. And they have lots of pretty people in and out of their beds. And they have nice "stuff". But that's it. Nothing matters because failure is free.